Which of These Statements Is True

question 113

Multiple Choice

Which of these statements is true?

• A) A low inventory turnover ratio or a low days' sales in inventory is a sign of good inventory management.
• B) A high inventory turnover ratio or a low days' sales in inventory is a sign of good inventory management.
• C) A low inventory turnover ratio or a high days' sales in inventory is a sign of good inventory management.
• D) A high inventory turnover ratio or a high days' sales in inventory is a sign of good inventory management.

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Definitions:

Permanent Accounts

Balance sheet accounts that carry their balances over into the next accounting period as they are not closed or reset at the end of the fiscal year.

Closing Entries

Journal entries made at the end of an accounting period to transfer balances from temporary to permanent accounts.

Income Summary

An account used in the closing process that summarizes all income and expenses for the period, leading to the net profit or loss.

Reversing Entry

An accounting entry that is made at the beginning of a period to negate or cancel out the effects of an adjusting entry made at the end of the previous period.